Yu v Bradley

[2021] NZHC 1717

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-1125

[2021] NZHC 1717

BETWEEN

JING JUN YU

First Applicant

AND

ANDREW INVESTMENTS (2004) LIMITED

Second Applicant

AND

DALE GORDON BRADLEY AND JILLIAN ANNE BRADLEY

Respondents

Hearing:	On the papers
Appearances:	LR Taylor QC and EJ Watt for the Applicants JWH Little and JK Grimmer for the Respondents
Judgment:	9 July 2021

JUDGMENT OF FITZGERALD J

[As to costs]

This judgment was delivered by me on 9 July 2021 at 3.30pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date…………………………

Solicitors:           Carson Fox Legal, Auckland

Powle & Hodson, Auckland

To:L Taylor QC, Auckland E Watt, Auckland

J Little, Auckland

H Lanham, Auckland J Grimmer, Auckland

YU v BRADLEY [2021] NZHC 1717 [9 July 2021]

Introduction

[1]                 By a judgment delivered on 17 May 2021, I granted the applicants’1 application for a stay of the Judgment Sum in this matter, but only as to approximately one-third of the amount. The remaining two-thirds was accordingly payable to the respondents2 (and has since been paid).

[2]                 At the conclusion of my judgment, I encouraged the parties to agree the costs of the stay application. They have been unable to do so. The issue centres on who was the “successful party” on the application.

Background

[3]                 The dispute between the parties arose out of a real estate transaction. It was the subject of a four day trial before Palmer J.3 The Bradleys were successful at trial and Palmer J’s judgment was sealed with a Judgment Sum of $449,639.85. This comprised the principal sum found to be owing by Mr Yu to the Bradleys, pre- judgment interest and costs.

[4]                 Mr Yu has since appealed Palmer J’s judgment to the Court of Appeal. A hearing before the Permanent Court is to take place in October this year. It is unknown when the Court will deliver judgment on the appeal, but it is realistic to expect that it could be in the first part of 2022.

[5]                 Mr Yu was concerned at paying the Judgment Sum to the Bradleys pending determination of his appeal, given his position that there is a real risk the Bradleys will be unable to repay it if his appeal is successful. He did, however, deposit the full Judgment Sum into his solicitor’s trust account, where he agreed it would be held pending the outcome of the appeal.

[6]                 The Bradleys, however, sought immediate payment of the full Judgment Sum, including on the basis that it was required by them to meet debts owed by Mr Bradley

1      I will refer to the applicants as Mr Yu.

2      I will refer to the respondents as the Bradleys.

3      Yu v Bradley [2020] NZHC 1822, (2020) 21 NZCPR 220.

and to pay down some of the mortgage on their residential property. They submitted that there was more than enough equity in the home to ensure they would be in a position to repay the Judgment Sum should Mr Yu’s appeal be successful.

[7]                 In the event, I accepted Mr Yu’s submission that there was some uncertainty as to the Bradleys’ ability to repay the entire Judgment Sum, and that it may take some time for them to be in a position to repay, given it may require the sale of their home. Nevertheless, taking a realistic approach, I was satisfied that the risk of being unable to repay around two-thirds of the Judgment Sum was sufficiently low that the principle that a successful plaintiff is prima facie entitled to the fruits of their judgment without delay ought to apply. I accordingly granted Mr Yu’s stay application, but only as to approximately one-third of the Judgment Sum.

The parties’ submissions on costs – more detail

The Bradleys’ submissions

[8]                 Counsel for the Bradleys submit that following Palmer J’s judgment, they were prima facie entitled to the Judgment Sum, but in the following months, Mr Yu refused to pay any amount. When negotiations over payment stalled, the Bradleys brought the situation to a head by issuing a statutory demand. This prompted Mr Yu to apply for a stay of execution of Palmer J’s judgment.

[9]                 In light of my judgment on the stay application, counsel for the Bradleys submit that the Bradleys are the successful party overall, given they have largely achieved what they have sought all along, namely to receive the “fruits of their judgment”. Counsel accept, however, that as approximately one-third of the Judgment Sum is subject to the stay, a scale 2B costs award in the Bradleys’ favour would properly be reduced by one-third to reflect this outcome. The Bradleys accordingly seek a scale 2B costs award of $8,113.32.

Mr Yu’s submissions

[10]              Counsel for Mr Yu highlight that the proceeding before me, and now being assessed for costs purposes, is Mr Yu’s application for a stay. Counsel submit that

Mr Yu was successful on that application, albeit not to the full extent. Counsel highlight that success on limited terms is still success.4 Reflecting that the application for a stay was only successful to approximately one-third of the Judgment Sum, counsel propose that costs are to lie where they fall, though submit it would have been open to Mr Yu to seek an award of costs in his favour, albeit in a reduced amount.

[11]              Counsel also point to the broader circumstances, including that Mr Yu’s willingness and ability to pay the Judgment Sum has never been in dispute, reflected in  his  payment  of   the   full   amount   into   his   solicitor’s   trust   account   on   11 December 2020. Counsel also submit that it was not unreasonable for Mr Yu to have concerns about paying the Judgment Sum to the Bradleys pending determination of his appeal, as reflected in the fact that his application was partially successful, and that further evidence was required from the Bradleys following the hearing of the application.

Discussion

[12]              It is important to recognise that the issue before me is the costs of Mr Yu’s application for a stay, rather than a broader assessment of who is the successful party in the overall litigation between these parties to date.

[13]              Bearing that in mind, I am of the view that Mr Yu was the successful party on his application for a stay. Ultimately, I granted his application, although only in relation to approximately one-third of the Judgment Sum.

[14]              The starting principle is that a successful party is entitled to an award of costs in the ordinary way. This is so even though there has been partial, and indeed relatively modest, success only. As the Court of Appeal stated in Weaver v Auckland Council, success on more limited terms is still success.5 In that context, the Court referred to the Supreme Court’s judgment in Shirley v Wairarapa District Health Board, in which the Supreme Court made clear that “the loser and only the loser pays, unless there are exceptional reasons”.6 The Court in Weaver stated:

4      Weaver v Auckland Council [2017] NZCA 330 at [26].

5 At [26].

6      Shirley v Wairarapa District Health Board [2006] NZSC 63, [2006] 3 NZLR 523 at [15].

[21] Recourse may then be had in search of such reasons to r 14.7(d) of the High Court Rules, which gives the Court discretion “despite rr 14.2 to 14.5” to refuse to award costs to the successful party if, notwithstanding overall success, “that party has failed in relation to a cause of action or issue which significantly increased the costs of the party opposing costs.” The same rule also empowers the Court to reduce costs in such circumstances.

[15]              Similarly, in Water Guard NZ Ltd v Midgen Enterprises Ltd, the Court of Appeal stated that:7

We disagree with the Judge that WGL lost [its status as successful party] because it failed on most of its claims which in turn occupied most of the trial. That factor can be properly recognised in other ways, such as reducing costs otherwise payable or ordering costs to lie where they fall.

[16]              In this context, I do not consider Mr Yu lost his status as the successful party on the stay application simply because it was granted to a limited extent only.

[17]              I also take into account that it was not unreasonable for Mr Yu to bring his application for a stay, given it was partially successful. I also take into account that he had taken the step of confirming his willingness and ability to pay the Judgment Sum in the event his appeal is unsuccessful by depositing it into his solicitor’s trust account. I also take into account that further evidence was required from the Bradleys in order to determine the application.

[18]              In these circumstances, and on the basis that Mr Yu was the successful party overall on the stay application, it would be unprincipled to make an award of costs in favour of the Bradleys.

[19]              Given Mr Yu’s position on costs, I make an order that the costs of the application for a stay are to lie where they fall.

Fitzgerald J

7     Water Guard NZ Ltd v Midgen Enterprises Ltd [2017] NZCA 36 at [13].